"I finally have a Carryover Allocation Certificate in hand — what's the actual countdown from here to the 10% test and placed-in-service, and is any of it different if my deal is bond-financed instead?"
Two different clocks, depending on financing type
| Milestone | Non-Tax-Exempt Bond Financed (9%) | Tax-Exempt Bond Financed (4%) |
|---|---|---|
| Carryover Allocation Request due | September 30 of the selection year (late, with an escalating fee, through December 10) | Not applicable — no Carryover step |
| Carryover Allocation Certificate / Code §42(m) letter issued | On or before December 31 of the selection year | Not applicable in the same form |
| 10% Carryover Allocation Test | Basis must exceed 10% of reasonably expected basis, measured one year from the Carryover Allocation Certificate date | Not applicable — no Carryover Allocation Certificate to measure from |
| One-year document package (site control, financing commitment, Partnership Agreement, permits, management docs) | Due the same one-year date as the 10% test | A parallel document package is instead due 90 calendar days after bond closing |
| Financing must close | No separate fixed date — tied to the placed-in-service deadline below | Bonds and equity must close by December 15 of the year following selection; 'There will be no extensions' |
| Placed-in-service deadline | No later than December 31 of the second calendar year following the year of allocation (IRC §42(h)(1)(E)(i)) | Governed by the property's Code §42(m) letter and bond closing timeline |
| Consequence of a miss | Credit allocation cancelled and returned to the Fund; no automatic re-allocation | Property loses its set-aside bond volume cap and owes a penalty under the Fund's Debt Management Policy |
Source: 2025 and 2026 Tax Credit Manual, Requirements for Requests and Time-Sensitive Deadlines; 2025 and 2026 Allocation Plan, Property Selection Process.
The 10% test, on WVHDF's actual clock
WVHDF has adopted the Housing and Economic Recovery Act of 2008's extension of the 10% Carryover Allocation Test to one year from the date of the Carryover Allocation Certificate, as authorized under Section 42(h)(1)(E)(ii) of the Code. An Owner must have basis in the property, as of that one-year date, of more than 10% of the Owner's reasonably expected basis in the property as of the close of the second calendar year following the year the allocation was made.
For this test, basis means Adjusted Basis of land and depreciable real property, whether or not includable in Eligible Basis — an Owner has basis in land and acquired real property once the benefits and burdens of ownership transfer, while basis in construction costs depends on the Owner's own accounting method (cash or accrual), with the accounting method of any flow-through entity controlling that determination.
The Fund does not treat the full year as available runway: it 'strongly encourages the Applicant to achieve the 10% Carryover Allocation Test and to submit all documents necessary to fulfill the requirements listed below within three to six months into the above-referenced one-year period,' warning that delay 'reduces the time remaining for the property to place in service and may jeopardize the Credit allocated to the property.'
What else is due on the same one-year deadline
By the same one-year date, the Applicant must also submit: a Schedule B – One-Year with an independent CPA Cost Certification (or, if already placed in service, a Schedule D Final Cost Certification with an Independent CPA Cost Certification and Examination); an updated WVHDF Form 1040 (pages 2 through 14a); documentation of continuous site control culminating in a recorded deed or Long-Term Lease in the Ownership Entity's name; a written permanent financing commitment for every source and amount of permanent financing, including an executed Deferred Developer Fee Permanent Financing Commitment; the final, fully executed Partnership Agreement with the equity provider; evidence of all required local zoning, planning, and building permit approvals; applicable HUD or RD approvals; and a full set of management documents (Affirmative Fair Housing Marketing Plan, management plan and agreement, tenant selection plan, lease form, and lease addendums).
This is the same document package — site control, financing commitment, Partnership Agreement, permits, and management documents — that a Tax-Exempt Bond Financed property must instead submit within 90 calendar days after its bond closing, rather than one year after a Carryover Allocation Certificate that bond deals never receive.
Miss it, and there's no path back
The Manual states plainly that 'neither the Plan nor the Manual contemplates or permits an automatic re-allocation of returned Credits if the placed-in-service deadline is not fulfilled' — responsibility for allotting enough time to place every building in the property in service is jointly on the General Partner and the developer. If any required one-year item goes unfulfilled, the Manual states the property's credit allocation 'will be cancelled and returned to the Fund.'
There's also a Fund-wide, year-end backstop that applies independent of any single property's own Carryover timeline: the Fund's policy is to allocate the current year's State Housing Credit Ceiling to all selected and qualified properties on or before December 31 of that year. Any selected property not eligible and qualified to receive its Carryover Allocation Certificate (or its building Allocation Certifications) by that December 31 is not carried into the next year — the Credits reserved in its Selection Decision Letter and Binding Agreement are automatically cancelled and the application automatically rejected. Separately, once a property places in service, it is not permitted to request additional Credits in a later calendar year.
Bond-financed properties run an entirely different clock
A Tax-Exempt Bond Financed property that accepts its selection in writing must close both the bonds and the equity before December 15 of the calendar year following selection. The Allocation Plan and Manual both state this in the same terms: 'There will be no extensions.' A property that received a bond inducement resolution from the Fund's Board of Directors and misses that date loses the bond volume cap set aside for it and owes a penalty defined in the Fund's Debt Management Policy — though it may resubmit an application in a future round.
No later than 90 calendar days after that bond closing, the Applicant must submit essentially the same document package a non-bond property submits at its one-year mark — continuous site control, a permanent financing commitment, the final executed Partnership Agreement, zoning/permit approvals, applicable HUD/RD approvals, and management documents. The Manual notes separately that these Fund deadlines are typically not the binding constraint in practice: lenders, syndicators, and other parties would generally require the same documents before bond closing regardless of WVHDF's own deadline.
The escalating cost of being late
| Date submitted | Late Submission Fee |
|---|---|
| October 1 | $600 |
| October 15 | $2,000 |
| November 1 | $3,800 |
| December 1 | $9,900 |
| December 10 (last day accepted absent extenuating circumstances) | $12,600 |
| December 31 | $18,900 |
The Fund will not accept a Carryover Allocation Request or Allocation Request after December 10, except in extenuating circumstances determined in the Fund's sole discretion. The fee is waived for a wait-list selectee who submits within 3 business days of the selection letter, and halved otherwise. Source: 2025 and 2026 Tax Credit Manual, Late Submission Fee.
Where this goes wrong
- Confusing the Carryover Allocation Request due date (September 30, with late fees accepted through December 10) with the Carryover Allocation Certificate deadline (issuance by December 31) — they're sequential milestones, not the same one, and WVHDF gives no assurance it can process a request filed after October 1 in time to issue the Certificate at all.
- Treating the 10% test's one-year clock as loose because the placed-in-service clock runs two years. WVHDF explicitly wants the one-year package finished at the three-to-six-month mark, not deferred to month twelve, because every month used there is a month subtracted from the two-year placed-in-service runway.
- Assuming a missed placed-in-service deadline can be cured with a fresh allocation. The Manual states plainly that neither it nor the Plan permits an automatic re-allocation of returned Credits.
- Applying the non-bond post-award timeline — Carryover, the one-year 10% test, etc. — to a Tax-Exempt Bond Financed property. None of it applies; bond deals run on the December 15 bond/equity closing deadline instead, a deadline the Fund states has no extensions.
- Miscalculating basis for the 10% test. It means Adjusted Basis in land and depreciable real property regardless of whether it's includable in Eligible Basis, and the Owner's (or its flow-through entity's) accounting method — cash vs. accrual — controls when construction-cost basis is deemed incurred.
- Treating the one-year document package (site control, permanent financing commitment, executed Partnership Agreement, zoning/HUD/RD approvals, management plans) as separate, lower-stakes paperwork from the 10% test itself. WVHDF ties failure on any required item in that same window to cancellation of the credit allocation, not just the 10% test's own failure.
- Overlooking the Fund-wide December 31 backstop: even a property tracking its own Carryover timeline correctly is automatically cancelled and rejected if it isn't eligible and qualified to receive its Carryover Allocation Certificate or building Allocation Certifications by December 31 of the current year.
- Assuming a property that misses its window can simply reapply for additional credits the following year while still holding its current allocation. Once a property places in service, it cannot request additional Credits in a subsequent calendar year.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies